As an independent contractor you might wonder if you need specialized independent contractor insurance. I’ll provide a checklist of the basic areas you’ll need to address in this post, but your local agent will be able to point you in the best direction based on your specific business needs. A lot depends on how long you’ve been in business, what assets you have, and whether or not you have employees or autos.
When you start in business you might have a tendency to think, “What do I have to lose?”
New businesses are fragile. A smaller liability loss of a few thousand dollars might not hurt a business with cash reserves, but new businesses usually don’t have that kind of financial margin.
You also need to consider why you started a business. You’re looking to the future, when hopefully you’ve created something of value that will be a meaningful asset for you and your family. Court awards can hang over your head for some time. Even if you’re currently somewhat judgment proof you need to consider future earnings potential.
I will use the rest of this posting to touch on some main categories of insurance to consider.
Independent Contractor General Liability
The first policy you might need could be a general liability policy for accidents around the workplace. Even if you don’t own or rent a building you can be held liable if you’re the cause of a trip and fall accident. Don’t skimp on policy limits. Usually the cost (increased limits factor) to carry $500,000 versus $100,000 of policy limits is quite small. If you have a contract, you may need to find out what limits and coverage you’re required to carry.
Independent Contractor Workers Compensation
Obviously, you need to meet statutory requirements. Employers need to carry Workers Compensation for their employees. In most states you can elect to exclude your self from the coverage, if you want.
Independent Contractor Health Insurance
Health insurance is another consideration. The new health laws have changed everything. I’ve owned my on business for three decades and this last year was the first time I found it beneficial to have my employees purchase their own health policies. I reimburse them for their expense. You need to have an agent check your options.
Independent Contractor Auto Insurance
If you own a car, truck, or pickup you will need auto insurance. Be sure to consider higher limits of liability. The limits required by your state might be ridiculously low. Some states require as little as $10,000 for property damage liability. Imagine how far that would go if you are responsible for a ten car pile up. Adequate bodily injury amounts are also hard to judge. A few years back I had a major heart problem and my bill for a three-day stay at the hospital was about $75,000. At the very least you should carry $100,000/$300,000 bodily injury limits. Also do not take low limits for uninsured or underinsured motorists. Over 16% of the drivers in our country are driving without insurance. Your UM / UIM limits should be equal to your Bodily Injury limits.
Independent Contractor Tool Floater
A coverage often overlooked by independent contractors is a tool floater. In my experience theft of tools is the most common claim for small contractors. Your tools are your lifeblood. Carry adequate coverage and keep your limits up-to-date. In nearly every tool loss I’ve seen the contractor understated the values, or forgot to report major purchases to his agent and wished he’d been more on top of things.
That brings up an agent. You might be on this site looking for a quote on your coverage. We don’t do that here. Independent contractors are very individualistic. No two of you are alike.
I can’t even imagine how many questions I would have to ask you to answer on line to give you a professional quote. More than you’d ever answer, I’m sure.
There are lots of coverages I haven’t mentioned above that you might need. I only talked about the main ones. An agent will have the knowledge to steer you in the right direction so that you can make an informed decision. He can efficiently work through your needs with you.
Smart agents love writing insurance for independent contractors because your account grows and grows. They can help you with all your insurance needs: personal and commercial. As you grow you will need life insurance products and possibly fidelity protection. Perhaps the local agent presented at the top right of the posting can help you with your needs?
Good luck with your business!
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